Orient Securities·2026-02-01 07:43Investment Rating - The report maintains a "Positive" outlook on the utility sector, indicating a favorable investment environment for the industry [8]. Core Insights - The introduction of a new capacity pricing mechanism for new energy storage and the gradual improvement of a diversified pricing system are key developments. The National Development and Reform Commission and the National Energy Administration have issued guidelines to enhance the capacity pricing mechanism for coal and gas power generation, as well as for pumped storage [8]. - The report highlights that coal prices have slightly rebounded, while coal inventories have decreased. The short-term outlook for spot coal prices is expected to remain stable, with limited upward potential due to a generally loose supply-demand balance in the coal market [8]. - The performance expectations for the utility sector have reached a low point, making undervalued utility assets worth attention. The report suggests that the utility sector remains a quality dividend asset for long-term investment [8]. Summary by Sections Policy Developments - The new capacity pricing mechanism aims to improve project profitability for new energy storage and encourage longer storage durations, thus promoting further capacity installations [8]. - The policy also seeks to stabilize revenue expectations for coal and gas power plants by providing a "minimum wage" for these adjustable power sources [8]. Market Trends - The report notes that the average spot electricity price in Guangdong has increased by 70.2% year-on-year, while Jiangsu's spot price rose by 11.7% week-on-week [11][13]. - Coal prices have shown a slight increase, with the Qinhuangdao Q5500 coal price at 692 RMB/ton, reflecting a 1.0% week-on-week rise [16]. Performance Analysis - The utility sector index has decreased by 1.7%, underperforming the CSI 300 index by 1.8 percentage points [34]. - The report identifies that the hydroelectric sector has shown the highest weekly increase among sub-sectors, while solar and wind sectors have faced declines [36]. Investment Recommendations - The report recommends several stocks within the utility sector, including Jiantou Energy, Huadian International, and Guodian Power, all rated as "Buy" [8]. - It also suggests focusing on high-quality hydropower companies and those with significant wind power contributions, indicating potential growth in these areas [8].